Washington Week: Medicare More Solvent, Hospital Pay Cut

WASHINGTON -- The healthcare reform law significantly improved the outlook for Medicare, according to the program's trustees, who released their annual report this week.

Medicare's hospital trust fund will be solvent for 12 years longer than projected last year, almost entirely because of savings from healthcare reform, said the Medicare trustees, who include Health and Human Services (HHS) Secretary Kathleen Sebelius, Labor Secretary Hilda Solis, Treasury Secretary Tim Geithner, and Commissioner of Social Security Michael J. Astrue.

Because of the projected savings under the healthcare reform law, Medicare's Hospital Insurance Trust Fund is not scheduled to be exhausted until 2029, the trustees said. Last year's report predicted bankruptcy of the Hospital Insurance Trust Fund in 2017. The "savings" referenced by the trustees are expected to stem from making the healthcare system more efficient and by providing lower annual increases in Medicare payments to hospitals, skilled nursing facilities, home health agencies, and most other providers.

Reform Aftermath

A U.S. District Court judge denied a request from the Obama administration to dismiss a lawsuit challenging the new healthcare reform law.

The lawsuit was filed by Virginia attorney general Ken Cuccinelli (R) on March 23, the day the president signed into law the Patient Protection and Affordable Care Act (PPACA). It alleges that the new law is unconstitutional because it would require individuals to purchase health insurance and impose a penalty on those who do not.

In its response to the Virginia lawsuit, the Obama administration argued that the law is well within the scope of the Commerce Clause.

Judge Henry E. Hudson of the U.S. District Court for the Eastern District of Virginia did not express an opinion on the merits of the argument over the Commerce Clause. Instead, he noted in his decision Monday that neither the U.S. Supreme Court nor any circuit court of appeals has "squarely addressed" the issue of whether Congress has the power to regulate -- and tax -- a citizen's decision not to participate in interstate commerce.

A hearing in the case is scheduled for Oct. 18.

Virginia is not the only state home to residents who disagree with the healthcare reform law. Residents of Missouri voted 71% to 29% in favor of a measure exempting residents of the state from the "individual mandate" provision of the new healthcare reform law.

The mandate, part of the PPACA, requires all individuals to purchase health insurance or pay a penalty beginning in 2014.

There is a question about whether the Proposition C vote is enforceable, since federal law usually preempts state law.

Measures similar to Proposition C will be on the ballot in Arizona and Oklahoma in November. A proposal scheduled to appear on Florida's ballot was nixed by a circuit court judge in that state because a proposed ballot summary contained misleading information.

Also in Florida, state attorney general Bill McCollum has filed a response to the federal government's motion that Florida's lawsuit against the healthcare reform law be dismissed.

"I'm really, really perturbed about intrusion of the federal government in the rights of my state," McCollum, a Republican candidate for governor, said at a press conference on Friday. "President Obama has led us down the path of an imperial presidency way too far."

A total of 19 other states have joined Florida in its lawsuit, which is similar to Virginia's in its challenge to the individual mandate. The Florida suit also contends that the Medicaid expansion included in the healthcare reform law is a violation of states' rights. A hearing on the motion to dismiss the suit is scheduled for Sept. 14.

Medicare Payment Rule Calls for Cuts to Hospitals

The Centers for Medicare & Medicaid Services (CMS) released its final payment rule for inpatient hospitals that will cut millions in payments to hospitals for 2011.

Under the proposed Inpatient Prospective Payment System (IPPS) rule, the nation's 3,500 acute care hospitals would receive a 0.4% reduction in reimbursement rates for inpatient stays, according to CMS.

The finalized reduction, coupled with other adjustments to maintain budget neutrality and ensure proper payment of outlier claims, is estimated to reduce total payments for operating expenses to IPPS hospitals in FY 2011 by 0.4%, or $440 million, compared with FY 2010, the agency said.

The estimated reduction will mean hospitals stand to lose nearly $300 million more than CMS estimated back in April.

FDA Staff Criticize Fast-Track Device Approval

The FDA issued two reports aimed at improving the controversial fast-track approval process used by the agency's Center for Devices and Radiological Health (CDRH) for low- to mid-risk medical devices.

Among the recommendations: the CDRH should consider requiring device-makers seeking fast-track approval through a process called 510(k) to submit more detailed safety and effectiveness data, and that the FDA have more explicit authority to rescind a 510(k) approval, as well as authority to approve labeling for devices approved through the 510(k) process.

The recommendations in the report are preliminary, and the CDRH hasn't made any firm decisions on which recommendations to pursue, cautioned CDRH director Jeffrey Shuren, MD, JD.

Next Week

As a swamp-like swelter descends on Washington every August, it's traditional for many Washingtonians to get out of Dodge. Members of Congress begin their August recess next week. The House is scheduled to vote on a jobs bill on Aug. 10, but senators likely will be gone before then. Both chambers return Sept. 13.

It appears at least some folks from the FDA will be in town -- on Wednesday, the FDA's Peripheral and Central Nervous System Drugs Advisory Committee will meet to discuss the investigational seizure drug ezogabine (Potiga).

Accessibility Statement

At MedPage Today, we are committed to ensuring that individuals with disabilities can access all of the content offered by MedPage Today through our website and other properties. If you are having trouble accessing www.medpagetoday.com, MedPageToday's mobile apps, please email legal@ziffdavis.com for assistance. Please put "ADA Inquiry" in the subject line of your email.